Financial Risk Manager Part 1

Explanation

For a uniform distribution on the interval [0,500]:

1. Median calculation: The median is the 50th percentile. For a uniform distribution on [a,b], the p-th percentile is given by: $\text{Percentile}_p = a + p \times (b-a)$

   For p = 0.5 (50th percentile): \text{Median} = 0 + 0.5 \times (500-0) = 0.5 \times 500 = 250$`$2`. **10th percentile calculation**: \text{10th percentile} = 0 + 0.1 \times (500-0) = 0.1 \times 500 = 50$`$3`. Difference calculation: $\text{Difference} = \text{Median} - \text{10th percentile} = 250 - 50 = 200$

Therefore, the correct answer is B (200).

Key points:

• Uniform distribution percentiles are linear interpolations between the minimum and maximum values
• The median (50th percentile) is exactly halfway between the minimum and maximum
• The 10th percentile is 10% of the way from the minimum to the maximum